Holiday let landlords have tax perk scrapped
Chancellor Jeremy Hunt has declared that he will end a tax scheme for holiday let landlords, saying it creates a 'distortion' in the housing market and prevents local people from finding affordable homes.
The scheme, which will be scrapped in April next year, enabled holiday let landlords to claim tax relief on their properties if they rented them out to holidaymakers for at least 105 days a year.
The Sunday Times had reported that the Furnished Holiday Lettings plan could cost landlords £300 million in lost tax breaks.
In his Spring Budget speech, Mr Hunt told MPs: "I am concerned this tax regime is creating a distortion meaning there are not enough properties available for long term rental by local people.
"So, to make the tax system work better for local communities I am going to abolish the Furnished Holiday Lettings regime."
Stamp duty discounts to those buying multiple properties
Mr Hunt also said he had reviewed the Multiple Dwellings Relief, which offered stamp duty discounts to those buying multiple properties in one deal.
He said this relief was intended to help investment in the private rented sector, but a study had shown it had not done so and was 'being regularly abused'.
As a result, the Multiple Dwellings Relief will now be abolished.
However, landlords got some good news from the Chancellor, who said he was reducing the higher rate of capital gains tax from 28% to 24%.
He said this decision was based on the guidance of the Office for Budget Responsibility and the Treasury, who had found that it would increase tax revenues by encouraging more sales.
'This was an underwhelming budget'
Simon Thompson, the managing director of Accommodation for Students, said: "Overall, this was an underwhelming budget, especially for landlords.
"The impact of the changes in holiday letting rules and the lower Capital Gains Tax (CGT) are uncertain.
"The lower CGT might tempt more buy to let investors to sell if they fear a future Labour government will raise CGT."
He added: "The downside of landlords selling is that we will see a shortage of homes to rent - and there will be higher rents.
"And that will continue creating a challenge for private sector tenants - especially for young tenants."
'Ignored calls to revitalise long-term investment in quality rented homes'
Ben Beadle, the chief executive of the National Residential Landlords Association, said: "The Chancellor has once again ignored calls to revitalise long-term investment in quality rented homes in favour of tinkering at the margins for short-term gain.
"Increasing taxes on holiday lets and cuts to Capital Gains Tax will make no meaningful difference to the supply of long-term rental properties.
"Meanwhile, those reliant on housing benefits still do not know if their benefits will be frozen from next year or not."
He adds: "With an average of 11 tenants chasing every home for private rent, social housing waiting lists at 1.3 million, almost 110,000 households in temporary accommodation and the number of first-time buyers slumping, the Budget needed to tackle the housing crisis once and for all.
"What we got was a deafening silence."
Tax giveaway could make thousands of renters homeless
Ben Twomey, the chief executive of Generation Rent, hit out at the CGT cut by saying: "This tax giveaway to landlords could make thousands of renters homeless.
"The only reason the Chancellor is doing this is because of the expectation that a lower tax rate will boost the number of sales, but apparently no thought has been given to the people living in those homes, who will generally face eviction before the landlords put them on the market.
"Landlords selling up is already one of the leading causes of homelessness."
He added: "If the government insists on going ahead with this cut, then renters will need better protection from eviction.
"Government could make the new rate conditional on selling with a sitting tenant, or even selling to the tenant, so that they aren't forcing people out of their homes."
Level the playing field between FHLs and buy to lets
Stevie Heafford, a tax partner at HW Fisher, said: "The proposed removal of the furnished holiday lettings tax regime could level the playing field between FHLs and buy to lets, potentially raising £300m for other tax cuts.
"Current FHL rules demand a property must be available for rent for at least 210 days in a tax year and rented for at least 105 so many second-home owners do not qualify.
"However, the removal of the regime will be another blow to legitimate holiday let businesses still recovering from the impact of the Covid pandemic."
Sam Reynolds, the chief executive of Zero Deposit, said: "It's disappointing to see the Government implementing further measures to reduce the financial profitability of many landlords with both a clamp down on short-lets and multiple dwellings relief.
"There's no denying that the increasing prevalence of short-term lets can have a detrimental impact on local housing markets, but the irony is that this problem has been made substantially worse due to the Government war waged against private landlords in recent years."
Gina Peters, the head of landlord and tenant at Dutton Gregory Solicitors, said: "Abolishing the stamp duty relief on multiple dwellings could be seen as another blow to those landlords who increase their property portfolios using it and will likely impact the number of landlords transferring their property portfolios to a company in view of the tax savings there.
"For the buy to let industry, a change in mortgage interest relief would have made a big difference in restoring some confidence for those landlords gradually increasing their portfolios, as well as further incentives for landlords to deal with properties that require upgrading, particularly those with regular recurring mould and damp."
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